Border Carbon Adjustments: The Potential Impact on Trinidad and Tobago’s Growth and Trade (Working Paper WP03/2026)

As countries pursue their climate ambitions towards achieving net zero by 2050, carbon pricing has become a key element on the agenda. While this practice attaches a cost to emissions, it may lead to carbon leakage as companies shift their carbon-intensive production activities abroad to countries with less stringent climate policies than the domestic economy. One mechanism to manage differences in carbon pricing due to a lack of co-ordination and uniformity among implementing countries is the establishment of border carbon adjustments (BCAs).